Maintain short positions, as the correction may still extend further. The COMEX Gold dipped USD1.10 last night to USD1,215.10. Based on the daily chart, we believe the commodity has not found bottom yet. From our technical perspective, the downtrend remains firmly in play, and the correction is likely to extend in the coming sessions. We also highlight that the 14-day RSI indicator is currently situated below the 50-pt neutral level at 31.81 pts – an indication that market sentiment is weak, thereby enhancing our downside view.

The current technical landscape suggests that more opportunities are leaning towards the sellers. Consequently, we make no change to our short call. In order to lock in part of the trading profits, traders are advised to set a trailing-stop above the USD1,240 threshold. Recall that our short recommendation was initially triggered below the USD1,309 mark on 16 May.

To the downside, our immediate support stays at USD1,215, or the low of 20 Jul’s “Bullish Engulfing” pattern. If this level is taken out, the following support is found at the USD1,207 threshold, which was the low of 10 Jul 2017. Towards the upside, we keep the immediate resistance at USD1,240, ie near the high of 26 Jul. This is followed by the USD1,272 resistance, which is located at 9 Jul’s high.

Source: RHB Securities Research - 10 Aug 2018